Tuesday, March 24, 2015

Wednesday Watch

Evening Headlines 
Bloomberg:
  • Greeks Celebrate Independence as EU Creditors Discuss Their Fate. Greeks celebrate their independence Wednesday with a military parade and a folk-music festival sponsored by the Ministry of Defense, as European officials more than 1,000 miles away review the financial aid that will shape their future. The European Central Bank Governing Council will hold a weekly call to assess the Emergency Liquidity Assistance keeping Greece’s banking system afloat while euro-area finance ministry officials will have a separate discussion on the progress of the country’s economic policy program. Without access to capital markets, or the ECB’s normal financing operations, Greek banks rely on almost 70 billion euros ($76 billion) of ELA to cover a financing shortfall exacerbated by steep deposit withdrawals.
  • Ukraine Credit Rating Cut to Second-Lowest Level by Moody’s. Ukraine had its credit rating cut by Moody’s Investors Service to the second-lowest level as the country started debt-restructuring negotiations with bondholders. Moody’s lowered the rating by one level to Ca and said in statement that the likelihood of a default is almost certain. The credit outlook is negative. Private creditors are likely to suffer “substantial losses” as a result of the government’s restructuring plan, Moody’s analysts including Kristin Lindow wrote. Ukraine’s indebtedness will “remain very high, in spite of the debt restructuring and plans to introduce reforms,” they said.
  • The Place Where China Began Its One-Child Policy Is Dying. On the flat delta of the Yangtze River north of Shanghai, Communist cadres embraced the call to stem the nation’s ballooning population a decade before it became national policy in 1979. The result is that Rudong is a window on China’s future, a windswept place of old people, closed schools and growing retirement homes. “China will see more places like Rudong very soon,” said Wang Feng, a professor of sociology at the University of California at Irvine. “It’s a microcosm of the rapid demographic and economic transformation China has been experiencing the last decades. There will be more ghost villages and deserted or sleepy towns.” 
  • RBA Warns Easy Global Policy Lifts Risk of Office Price Fall. Australia’s central bank said easy monetary policy globally is spurring demand for the nation’s office buildings, even as vacancies climb and rents fall, raising risks of a future price slump. “Prices have continued to rise at a national level, driven in particular by investors’ search for yield in the global environment of low interest rates and ample liquidity, with the lower Australian dollar also likely to be adding some impetus to foreign demand,” the central bank said Wednesday in Sydney. “The risk of a large repricing and associated market dislocation in the commercial property sector has increased. 
  • Asian Stocks Advance as Consumer, Materials Shares Lead Gains. Asian stocks rose, with the regional benchmark index recovering Tuesday’s loss to head for a six-month high, as consumer staples and materials shares led gains. The MSCI Asia Pacific Index added 0.2 percent to 148.98 as of 9:03 a.m. in Tokyo.
Wall Street Journal:
  • Google(GOOG) Makes Most of Close Ties to White House. Search giant averages a White House meeting a week during Obama administration.
  • Kraft in Talks to be Acquired by 3G Capital. A deal for food company would likely top $40 billion.
  • Biotech’s Rally Fuels Bubble Fears. As Valuations Skyrocket and Nasdaq Nears Record, Anxiety Builds. Nasdaq bubble fears are back. But this time around, the biggest dangers may not involve technology stocks. Instead, some investors are looking askance at biotechnology stocks, a sector that wasn’t nearly as developed when the Nasdaq Composite Index set its record close in 2000 of 5048.62.
  • Obama’s Israel Tantrum. The leader of the free world takes revenge on an ally. You’ll have to forgive President Obama. The leader of the free world is still having difficulty accepting that the Israeli people get to choose their own prime minister, never mind his preferences. The latest White House tantrum in the wake of Benjamin Netanyahu’s re-election last...
Zero Hedge:
Business Insider:
Telegraph:
Evening Recommendations 
  • None of note
Night Trading
  • Asian equity indices are -.50% to +.25% on average.
  • Asia Ex-Japan Investment Grade CDS Index 112.0 -.75 basis point.
  • Asia Pacific Sovereign CDS Index 60.5 +.25 basis point.
  • S&P 500 futures unch.
  • NASDAQ 100 futures +.05%.
Morning Preview Links

Earnings of Note

Company/Estimate
  • (APOL)/-.16
  • (PAYX)/.46
  • (FIVE)/.60
  • (FUL)/.37
  • (PVH)/1.73
  • (RHT)/.41
  • (WOR)/.33
Economic Releases
8:30 am EST
  • Durable Goods Orders for February are estimated to rise +.2% versus a +2.8% gain in January.
  • Durables Ex Transports for February are estimated to rise +.2% versus a +.3% gain in January.
  • Cap Goods Orders Non-Defense Ex-Air for February are estimated to rise +.3% versus a -.3% decline in January.
10:30 am EST
  • Bloomberg consensus estimates call for a weekly crude oil inventory build of +4,912,500 barrels versus a +9,622,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -1,687,500 barrels versus a -4,473,000 barrel decline the prior week. Distillate inventories are estimated to fall by -856,250 barrels versus a +380,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.54% versus a +.3% gain the prior week.
Upcoming Splits
  • (MGA) 2-for-1
Other Potential Market Movers
  • The Fed's Evans speaking, German IFO, $35B 5Y T-Note auction, weekly MBA mortgage applications report and the (AXP) investor day could also impact trading today.
BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

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